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Originally Posted by jmcgiboney I receive royalty payments for oil and gas production. Are there any additional deductions that I may take in addition to the depletion of 15%. |
basically, Oil and gas royalty taxes come in all shapes and sizes. There are county royalty taxes, state royalty taxes, and federal royalty taxes, all of which add up to significant tax bills for mineral and royalty owners; so, inmany situations, you can deduct gas, oil and other transportation expenses from your income taxes. Always keep supporting documentation such as receipts, travel logs, statements and other documentation to substantiate your claims. Travel logs should contain the date, who is involved (charity, doctor, or business), purpose of the trip, mileage, expenses and pertinent information. You must keep accurate records for each trip, prorating the expenses according to the purpose (medical, charity, or business).
Note; as said, fortunately, there are ways to reduce your mineral rights and royalty taxes. The depletion allowance is one way to accomplish this. Since minerals are a finite source and will eventually play out, the IRS code generally allows royalty owners to deduct up to 15% of the income from their mineral interests.